8.
Wholesale Price Index(WPI)
• An index that measures and tracks the changes
in price of goods in the stages before the retail
level.
• It shows the average price changes of goods
sold in bulk, and they are group of indicaters
that follow growth in the economy.
• WPI inflation rate is 10% in Sep 2011 to 7.7%
in March 2012
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9.
Consumer Price Index(CPI)
• CPI is weighted average of prices of a basket of consumer
goods and services such as transportation, food and
medical care.
• CPI is calculated by taking price changes of each item in
the predetermined basket of goods and averaging them.
• Used to assess price changes associated with the cost of
living.
• CPI rose from 8.8 per cent in February to 9.4 per cent in
March and further to 10.4 per cent in April
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10.
Current Account Deficit(CAD)
• When a country’s total imports of goods, services and
transfers is greater than the country’s total exports of
goods, services and transfers.
Statutory Liquidity Ratio(SLR)
• SLR is the amount of liquid assets, such as cash, precious
metals or other securities that a financial institutions must
maintain as reserves other than the cash.
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16.
Painful Squeeze – Non IT Firms
• The smaller firms, including those that rely on the U.S. market
are clearly hurting.
•
Some 65% of our exports come from the SME segment. There
are 15 million workers in this sector. The SMEs have profit
margins of barely 5-10%. If the rupee rises, as it has, their
entire profit gets wiped out
• The Confederation of Indian Industry (CII) says that the worst
hit are the textile and leather sectors
• Garments exporter and auto-part suppliers are hurting even
more. Many of them banked on the dollar appreciating
routinely after signing a contract
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17.
Challenges of rupee appreciation
• A one per cent rise in the rupee against the dollar will have a 7580 basis points impact on the operating margins for IT
companies.
• Exports will be badly effected.
• Salaries of people working in MNC's would come down
drastically.
• If the rupee appreciation continues, we have to go out and look
for people in low-cost areas

18.
RBI’S Steps Towards Economic Growth
•
Government could cut the subsidies on Fuel and Fertilizers.
• Raise the borrowing limit of scheduled commercial facility(MSF)
from 1% to 2% of their Net Demand and Time
Liabilities(NDTL).
• Banks can continue to access the MSF even they have excess
Statutory Liquidity Ratio(SLR).
•
The government is planning to allow 51% Foreign Direct
Investment(FDI) in multi brand retail.
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19.
• Government is targeting to bring the fiscal deficit which
stood at 5.76% of GDP in 2011-12 down to 5.1% in current fiscal.
• External Commercial Borrowings limit has been lifted to $40bn
from $ 30bn earlier. This would be to repay outstanding rupee
loans of Indian businesses
• This comes as a relief to the manufacturing sector. The rupee loans
are expensive while foreign currency loans are cheaper.
• The Reserve Bank of India said it would allow companies to
borrow more from overseas to pay back their high cost rupee loans.
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